Entrepreneur Resources Your source for small business information
Inventory management is central to the success of businesses, if you buy too much, you need to find a way to trim it down which costs you money, and if you buy too little, you risk a sales surge and damage to your reputation. Follow the advice in the article to safeguard the inventory.
Backup Inventory
One of the main problems businesses have when planning their inventories is overstocking and losing money by offering sales deals, but the opposite situation is also a risk; what happens when there is a buying rush and you don’t have enough products in stock to cover the demands? In this case, you lose out on sales and harm your business’s reputation with buyers.
What is needed is a backup inventory, which can be organized with the manufacturer or privately if that is how you manage your inventory. A backup inventory is the best way to safeguard your profits and reputation when the market changes suddenly. Dramatic market changes occurred during the pandemic, and many businesses lost out due to management.
Balanced Inventory
It takes time and dedication to create a balanced inventory for a business, but that has to be the aim. A balanced inventory is a situation where you have enough products to cover current and future demands, along with enough left over to cover unforeseen supply surges. There will be some breakage, but it’s far less than you would expect for a small business without any trends.
The best way to create a balanced inventory is to track sales processes over time and make decisions on products that are selling better than others. This process needs to be continuous, the products need to be tacked and monitored and changes made to the systems to ensure it is balanced and resilient. If you need to have sales, often it’s a sign the inventory is unbalanced.
Kitting Technique
The kitting technique has been used by businesses of all sizes for decades; it’s the process of combining two products and turning them into a bundle that can be sold at a reduced price. Kitting is typically used in situations when a business has overstocked; this can happen easily at the end of the year, which is why so many stores create sales in January. Use kitting wisely.
The kitting technique can be used at any time of the year, so even if you have additional stock in spring and summer, it can help to offer your customers some deals. The kitting technique is a win-win situation because it reduces your overstocked inventory and improves the customer experience. The downside is that it’s not always cost-effective to sell the stock at lower prices.
Future Inventory
Businesses of all sizes need to have a backup inventory to cover sales surges, but they also need excellent inventory management to ensure the business remains profitable in the long term. Future inventories are important for covering customer demands and maintaining business profits over time. Future inventories are needed, but they take some time to plan.
To create a future inventory that is well-optimized and tailored to your present and future requirements, you need to track and monitor your products constantly. Ensure that you have the right people working on the inventory, and you can make more realistic predictions about what you need to buy. When it comes to the bottom line, these margins are crucial to your success.
Self Storage Options
If you are running a small business like an e-commerce business that sells on Amazon, you need somewhere to store your inventory. Amazon offers some options for this, allowing small businesses to ship products conveniently; however, these services can incur fees that eat into your profits. That said, you can learn how to Lower Amazon FBA Storage Fees and profit.
Another option is to avoid amazon storage facilities completely and use private self-storage facilities. Self-storage facilities are conveniently located in the area, so you can access the inventory at short notice; these facilities are secure, dry, and suitable for storing backup inventories and future inventories. That said, you need to visit your storage facilities regularly.
Final Thoughts
A small business has many working parts, you need a website, a marketing system, and a customer service system, but one of the central components has to be the business inventory. Owners need to know how many products to bring in and how much is needed for emergencies.
With some smart inventory management approaches, you can create a resilient inventory that serves your customers and makes your business more profitable overall. Make sure you track and manage your inventory regularly and optimize for your business customers and dynamics.
